diff --git a/compiler/src/dotty/tools/dotc/transform/TailRec.scala b/compiler/src/dotty/tools/dotc/transform/TailRec.scala
index 916b9279da09..9ee3aa5b1a8c 100644
--- a/compiler/src/dotty/tools/dotc/transform/TailRec.scala
+++ b/compiler/src/dotty/tools/dotc/transform/TailRec.scala
@@ -286,11 +286,23 @@ class TailRec extends MiniPhase {
     def yesTailTransform(tree: Tree)(using Context): Tree =
       transform(tree, tailPosition = true)
 
+    /** If not in tail position a tree traversal may not be needed.
+     *
+     *  A recursive  call may still be in tail position if within the return
+     *  expression of a labeled block.
+     *  A tree traversal may also be needed to report a failure to transform
+     *  a recursive call of a @tailrec annotated method (i.e. `isMandatory`).
+     */
+    private def isTraversalNeeded =
+      isMandatory || tailPositionLabeledSyms.size > 0
+
     def noTailTransform(tree: Tree)(using Context): Tree =
-      transform(tree, tailPosition = false)
+      if (isTraversalNeeded) transform(tree, tailPosition = false)
+      else tree
 
     def noTailTransforms[Tr <: Tree](trees: List[Tr])(using Context): List[Tr] =
-      trees.mapConserve(noTailTransform).asInstanceOf[List[Tr]]
+      if (isTraversalNeeded) trees.mapConserve(noTailTransform).asInstanceOf[List[Tr]]
+      else trees
 
     override def transform(tree: Tree)(using Context): Tree = {
       /* Rewrite an Apply to be considered for tail call transformation. */
@@ -441,7 +453,7 @@ class TailRec extends MiniPhase {
 
         case Return(expr, from) =>
           val fromSym = from.symbol
-          val inTailPosition = !fromSym.is(Label) || tailPositionLabeledSyms.contains(fromSym)
+          val inTailPosition = fromSym.is(Label) && tailPositionLabeledSyms.contains(fromSym)
           cpy.Return(tree)(transform(expr, inTailPosition), from)
 
         case _ =>
diff --git a/tests/run/tailrec-return.check b/tests/run/tailrec-return.check
deleted file mode 100644
index 361e76d8a285..000000000000
--- a/tests/run/tailrec-return.check
+++ /dev/null
@@ -1,7 +0,0 @@
-6
-false
-true
-false
-true
-Ada Lovelace, Alan Turing
-List(9, 10)
diff --git a/tests/run/tailrec-return.scala b/tests/run/tailrec-return.scala
deleted file mode 100644
index aa760960403d..000000000000
--- a/tests/run/tailrec-return.scala
+++ /dev/null
@@ -1,66 +0,0 @@
-object Test:
-
-  @annotation.tailrec
-  def sum(n: Int, acc: Int = 0): Int =
-    if n != 0 then return sum(n - 1, acc + n)
-    acc
-
-  @annotation.tailrec
-  def isEven(n: Int): Boolean =
-    if n != 0 && n != 1 then return isEven(n - 2)
-    if n == 1 then return false
-    true
-
-  @annotation.tailrec
-  def isEvenApply(n: Int): Boolean =
-    // Return inside an `Apply.fun`
-    (
-      if n != 0 && n != 1 then return isEvenApply(n - 2)
-      else if n == 1 then return false
-      else (x: Boolean) => x
-    )(true)
-
-  @annotation.tailrec
-  def isEvenWhile(n: Int): Boolean =
-    // Return inside a `WhileDo.cond`
-    while(
-      if n != 0 && n != 1 then return isEvenWhile(n - 2)
-      else if n == 1 then return false
-      else true
-    ) {}
-    true
-
-  @annotation.tailrec
-  def isEvenReturn(n: Int): Boolean =
-    // Return inside a `Return`
-    return
-      if n != 0 && n != 1 then return isEvenReturn(n - 2)
-      else if n == 1 then return false
-      else true
-
-  @annotation.tailrec
-  def names(l: List[(String, String) | Null], acc: List[String] = Nil): List[String] =
-    l match
-      case Nil => acc.reverse
-      case x :: xs =>
-        if x == null then return names(xs, acc)
-
-        val displayName = x._1 + " " + x._2
-        names(xs, displayName :: acc)
-
-  def nonTail(l: List[Int]): List[Int] =
-    l match
-      case Nil => Nil
-      case x :: xs =>
-        // The call to nonTail should *not* be eliminated
-        (x + 1) :: nonTail(xs)
-
-
-  def main(args: Array[String]): Unit =
-    println(sum(3))
-    println(isEven(5))
-    println(isEvenApply(6))
-    println(isEvenWhile(7))
-    println(isEvenReturn(8))
-    println(names(List(("Ada",  "Lovelace"), null, ("Alan", "Turing"))).mkString(", "))
-    println(nonTail(List(8, 9)))